Abstract: To analyze the technology innovation ability of China's auto industry, an analytical model is developed based on the theory of technology innovation. Using this model, the performances of technology innovation ability in auto industry, household audio-visual equipment industry and telecommunication equipment industry are evaluated. The model adopts a new and more sophisticated two-line approach based on Data Envelopment Analysis (DEA) and Principal Component Analysis (PCA). Furthermore, six factors are introduced into this model. The evaluation results show that the technology innovation ability of China's auto industry is in the low level, and it confronts insufficient innovation input and unbalanced innovation output. At the same time, the innovative transformation process faces inefficiency. Finally, several policy suggestions are proposed on improving the technology innovation ability of China's auto industry.

Key words: technology innovation ability, performance evaluation, principle component analysis, data envelopment analysis